Twenty-First Century Fox 2006 Annual Report Download - page 55

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Results of Operations (CONTINUED)
Liquidity and Capital Resources
Current Financial Condition
The Company’s principal source of liquidity is internally generated funds; however, the Company has accesstothe world-
wide capital markets, a$1.75 billion Revolving Credit Facility and various film financing alternatives to supplement its cash
flows. The availability under the Revolving Credit Facility as of June 30, 2006 was reduced by letters of credit issued which
totaled approximately $180 million. Also, as of June 30, 2006, the Company had consolidated cash and cash equivalents of
approximately $5.8 billion. The Company believes that cash flows from operations will be adequate for the Company to
conduct itsoperations. The Company’s internally generated fundsarehighly dependent upon the state of the advertising
market and public acceptance of film and television products. Any significant decline in the advertising market or the per-
formance of the Company’s films could adversely impact its cashflows from operations which could require the Company
to seek other sources of funds including proceeds from the sale of certain assets or other alternative sources.
The principal uses of cash that affect the Company’s liquidity position include the following: investments in the pro-
duction anddistribution of new feature films and television programs; the acquisition of and payments under program-
ming rights for entertainment and sports programming; paper purchases; operational expenditures; capital expenditures;
interest expense; income tax payments; investments in associated entities; dividends; acquisitions and stock repurchases.
Sources and Uses of Cash—Fiscal 2006 vs. Fiscal 2005
Net cash provided by operating activities for the fiscal years ended June 30, 2006 and 2005 is as follows (in millions):
YearsEnded June 30, 2006 2005
Net cash provided by operating activities $3,257 $3,371
The decrease in net cash provided by operating activities primarily reflects lower cash collections from worldwide home
entertainment product primarily driven by the decrease in worldwide home entertainment revenues at the Filmed
Entertainment segment as compared to fiscal 2005. In addition,also contributing to the decrease was higher sports rights
and higher tax payments during fiscal 2006 as compared to fiscal 2005.
Net cash used in investing activities for the fiscal years ended June 30, 2006 and 2005 is as follows (in millions):
YearsEnded June 30, 2006 2005
Cash flows used in investing activities:
Property, plant and equipment, net of acquisitions $(976) $(901)
Acquisitions, net of cash acquired (1,989) (69)
Investments in equity affiliates (89) (106)
Proceeds from sale of investments and other non-current assets412800
Proceeds from disposition of discontinued operations 610 —
Other investments (28) (27)
Net cash used in investing activities $(2,060) $(303)
Cash used in investing activities during fiscal 2006 was higher than the cash used in investing activities during fiscal 2005.
The increase is primarily due to the acquisitions of Intermix Media, Inc., IGN Entertainment, Inc. and aregional cable
sports channel during fiscal 2006. The cash used in investing activities during fiscal 2006 was partially offset by proceeds
received from the disposition of discontinued operations as the Company sold its TSL Education Ltd. division for approx-
imately $395 million in cash consideration in October 2005 and its Sky Radio Limited division for approximately $215
million in cash consideration in April 2006. Proceeds from the sale of investments and non-current assets primarily repre-
sent cash received for the sale of Innova and China Netcom during fiscal 2006 and cash received in advance on the sale of
Sky Brasil to DIRECTV and the sale of other non-strategic investments during fiscal 2005.
The Company has evaluated, and expects to continue to evaluate, possible acquisitions and dispositions of certain
businesses. Such transactions may be material and may involve cash, the Company’s securities or the assumption of addi-
tional indebtedness.
ANNUAL REPORT 55